Various people are wandering about saying that investor Warren Buffett has lost his touch. The gist of the argument: A combination of style drift (derivatives?!), ill-timed investments, and his "long term" refrain on declining positions demonstrate that he is, at the very least, having a hard time right now, if not outright floundering, at least a little.

Doug Kass argues this in a morning post over at RealMoney. As he would concede, this isn't the first time Warren has been deemed ready for pasture, what with similar arguments having been made in 1999, which turned out to be premature.

Is this time different? Kass argues "Yes", with the Buffett no longer having as long a long term as he once did, and with his style drift particularly worrisome in the face of some ill-timed investments.

I’ve been arguing for some time that Buffett is feeling more pain than most people realize, but I’m also not convinced he has lost his touch either. Maybe it's time to open this conversation up. Other thoughts?

Treasury Secretary Henry Paulson has finally conceded the obvious: There is no longer a toxic asset relief program, or TARP as it was originally called. Toxic assets are not being purchased from financial services company at below market, market, above market, or even supermarket prices, for that matter. It just isn’t happening.

Why not? Partly because it wasn’t the best first thing to do anyway. While it was a cool markets uber alles exercise – we’ll let the market solve the market’s problem! – and a neat grad school thesis project, it was wildly impractical, and it never seemed any less so no matter how many times it was explained.

Instead, there is a $350-$700b Treasury slush fund for doing … stuff to get credit markets working. Mostly consumer credit. Now, that’s not a terrible idea, but it also requires immense trust in the person/people doing the spending. It also creates a very high transparency and procedural hurdle to be cleared by the those same people. After all, the opportunities for abuse and scope creep were always large, and they have now become immense and palpable.

Let’s stop talking about TARP. It doesn’t exist. Call it the PKFKATARP, at best – or if it’s to be all about consumers, maybe just CARP. Either way, it would be nice to know more about what the hell is going on and why. I’m just saying.

[Update] GE is now newly on the list of The Saved. No surprise, as this had been chattered for some time, but we really need to make clearer to people – taxpayer – what separates the saved from the damned.

Changes across four presidents in five interesting measures of the economic world as we know it:

[via PPI]

Good conversation with Pershing Square's Bill Ackman on Charlie Rose last night. He is a lucid and reasonable guy, perhaps to a fault, and there continues to be chatter of an Obama administration role for him.

There is some must-see bailout TV tomorrow. Hedge fund managers John Paulson, Jim Simons, George Soros, Phil Falcone, and Ken Griffin will all be testifying tomorrow before the House Oversight Committee. I genuinely hope it doesn't turn into a blame game and shouting match, but I don't have a lot of confident that it won't. The most interesting thing will likely be whatever prepared material they submit, so watch for that early tomorrow.

Here is the full list of guests on the Henry Waxman Power Hour, which should be streamed from the House site, as well as over C-Span, starting at 8:30am EST.

* John Alfred Paulson, President, Paulson & Co., Inc.
* George Soros, Chairman, Soros Fund Management, LLC
* James Simons, President, Renaissance Technologies, LLC
* Philip A. Falcone, Senior Managing Partner, Harbinger Capital Partners
* Kenneth C. Griffin, Chief Executive Officer and President, Citadel Investment Group, LLC
* Professor Andrew Lo, Director, MIT Laboratory for Financial Engineering, Massachusetts Institute of Technology, Sloan School of Management
* Professor David Ruder, Northwestern University School of Law, Former Chairman, U.S. Securities and Exchange Commission
* Professor Joseph Bankman, Stanford University Law School
* Houman Shadab, Senior Research Fellow, Mercatus Center, George Mason University

My friend (and Money:Tech-er) David Leinweber has a up a provocative post over on the O'Reilly website about hacking the banking system. The root idea: Why not stop trying to bail out the current banking system, and simply build a new one instead?

Here is the nut para:

$700 billion is a huge amount of money--more than the equity book values of Goldman Sachs, Morgan Stanley, JP Morgan, Citigroup, Washington Mutual, Bank of America and Wachovia combined. This money should be used to capitalize new banks throughout the country. To be operational as quickly as possible and to preserve valuable human and operational capital, these banks will buy good operational assets from insolvent banks in FDIC receivership. To avoid a concentration of risk, the capital should be distributed amongst at least 20 new institutions. To avoid the hazards of government ownership or sponsorship, the shares of these institutions should be distributed to the American people (each bank can have 300m shares; one for every American man, woman, or child).
Rather than using taxpayer money to cushion losses of previous, bad investments, this will allow all of the capital to facilitate lending to the real economy where it will prevent the current recession from becoming a depression and expedite the recovery which would otherwise be many years away. This plan is akin to preserving the body of banks while replacing their old brains (senior management and risk management policies) and their old hearts (balance sheets).

David (and co-author Sal Khan) deal ably in the paper with some of the more obvious criticisms, so I won't raise those. Read the paper to see how they respond on CDS unwinding, etc.

My take on this wild-eyed idea? It is intriguing, and a fresh perspective on the problem. I suspect the real issues are social, however, not technical, so the likely problems are likely to be in recreating functioning organizations in a reasonable amount of time, etc. Nevertheless, this fever dream is is definitely worth mulling.